Lose that annual fee!

On a mission to clean up and improve my credit score, I had taken on a couple of cards a few years ago with annual fees. Neither card had a very high credit limit, but at the time it was all any credit card company was willing to lend me. So, I signed on the dotted line and decided to swallow their fees with the hopes of building a solid payment history. Flash forward to today and I’ve finally accomplished that goal: my credit score is over 700 and I’m now receiving credit card offers from more legitimate credit card companies with lower APR’s and NO annual fee.

It took me a while to decide whether I should accept any of these new offers, though. My reasoning was that taking on a NEW card, and potentially canceling an OLD card could ding my credit score. Since raising my credit score was part of my 3-step plan toward becoming a homeowner, it seemed counter-productive to take this action. On the other hand, because I’ve put off purchasing a house for a couple of years, I decided that I really didn’t want to continue paying annual fees on cards with such low credit limits.

A NOTE ABOUT CLOSING CREDIT CARDS: It’s important that when YOU close a card of your own, you follow up with a letter to all three credit bureaus explaining to them that you were the one that closed the account, not that the account was closed by the creditor.

I’m excited to say that the other day, I accepted an offer from American Express for a card with a 10.49% APR, no annual fee, and a credit limit that is much higher than a couple of my combined cards. I canceled one of my annual fee cards, the one with the lowest credit limit, and am waiting to see how this activity will affect my credit score. I made sure to mail in my letter to all three bureaus explaining that I closed the account. If not much harm has been done, my goal is to cancel my second card with an annual fee, leaving me a total of 3 credit cards (one which I share with my husband) with only one annual fee card. I’m not really willing to relinquish the last annual fee card because I feel I need the payment history which dates back about 5 years.

Since I don’t use my cards unless I can pay them off in full each month, I should be able to quickly reestablish any points I do lose on this transaction. Just a quick refresher on how credit scores are calculated:

1. 35% is based on payment history: Most reports show a two-year period of payment history on installment, revolving, and store credit. Even one payment that is over 30 days late can negatively affect your score.
2. 30% is based on how much debt you owe: This is also affected by how much credit you are utilizing.  They like to see a debt to credit utilization of 30% or less.  Another note on credit utilization is that you should never be utilizing more than 30% of your credit on any one card or loan.
3. 15% is based on your length of credit history: The longer you’ve been responsible with credit, the better your score gets. Unfortunately with this one, all you can do is wait and make sure that your oldest, positive credit account is on your reports.
4. 10% is based on the types of loans you have: There are three types of loans available to you, installment, revolving, and store credit. The credit bureaus like to see that you have access to at least two of these types. Installment loans can be a car loan, mortgage, or student loan. A revolving line of credit is usually a typical credit card like a Visa or MasterCard. A store line of credit can be a gas card or a department store credit card.
5. 10% is based on new credit: Credit bureaus may view you as a risk if you’ve opened too many accounts in too short a time period. This is based on how recently you’ve opened a new line of credit of any kind, and how many you’ve opened.

My latest action could potentially negatively affect my credit score because the card I canceled was one of my oldest, see point #3, and I opened a new credit card, see point #5. Only time will tell, and in the meantime, I’m saving $69.00 a year.

Newlywed Bliss Box

I’m getting close to the finale on the Bliss Box Contents. I’m down to the Spender/Saver Quiz, which this post will explain, the resource list, and the possible addition of a great book. Any additional items that have been suggested such as day spa coupons or saving love notes would need to be added separately. I’ve created this quiz using my own personal knowledge of how my husband and I decide what to buy and when to buy it. I consider myself a saver and think my husband definitely falls more on the side of spender. So my personal experiences guided my question creation. Enjoy the quiz below:

1.) You and your loved one are planning a vacation. The first thing you do is:
A. Save a portion of your income for 6 months to a year before a trip is even discussed.
B. Scour the internet for savings on flight and hotel packages. If there aren’t any, you put off your trip until a deal can be found.
C. Find the best price on an internet site, such as Travelocity, and book your trip.
D. Head to your local travel agent.

2.) Your first generation flat-screen TV isn’t nearly as pixel-perfect as your neighbor’s brand new one. You decide to:
A. What flat-screen TV? I’m still getting by on my old tube-style TV / or don’t own a TV.
B. Not compare your TV’s since it really isn’t that important to you.
B. Wait a few more years before upgrading a TV that is still working just fine.
C. Run out and purchase a brand-new flat-screen. Take that, Joneses!

3.) Your trusty-car is becoming more and more rattle-prone and noisy each day. Though your dealer has told you that is normal based on its age and everything else is just fine you decide to:
A. Trust your dealer and keep your car until it completely dies.
B. Begin to formulate a plan and save money to purchase a new car in a year or two.
C. Post your car on eBay to see if you can get a decent bid, giving you enough money to put a down-payment on a new one.
D. Run to your nearest dealer and trade in your perfectly good, but rattly, car for a new one.

4.) Buying generic brands makes you feel:
A. Terrific! They’re the only brands you buy.
B. Okay, though there are definitely some items you must buy that are name-brands.
C. Ashamed. You only buy generic when you just can’t afford name-brands.
D. Generic brands? What are you taking about? I only purchase name-brand items.

5.) When comparing your savings account to your overall debt, you feel:
A. Great! Your savings account is hefty and you have no debt, or very little to speak of.
B. Pretty good. Your savings account is growing by the day and your debt is dwindling quickly.
C. Okay. You’re trying to save a portion of your income, but your debt isn’t getting paid down very quickly.
D. You’re drowning in debt and have no savings account to speak of.

6.) A budget is:
A. A tool you use to help figure out where your money is going, each category specifically details income and expenses.
B. Something you look at quarterly and use it loosely to determine where you can save money.
C. You’ve heard of it, but you don’t bother to create one. If the money is there, great. If not, oh well.
D. What are you talking about? I need a dictionary.

7.) You view your credit cards as:
A. A tool that can help you build your credit score. You only use them when you know you can pay them off in full each month. (Or you don’t have any credit cards).
B. A great convenience. They allow you to purchase large ticket items, then pay them off quickly at a low interest rate.
C. Something of a catch-22. They are great because you can purchase items you can’t afford, but then you have to pay more for the item in the long run.
D. A curse. I wish I’d never signed up for one!

8.) You’re out window shopping with a friend when a beautiful watch catches your eye. You know the price is slightly above what you’re willing to pay, but your credit card just offered you a 6-month zero percent interest rate that’s very enticing. You decide to:
A. Forget about the watch, you don’t need it.
B. Go home and price check that watch against online deals to see if you can get it for less. If you can’t, then forget it.
C. Wait until the watch goes on sale, then go buy that baby!
D. Say the heck with it and swipe that plastic card.

Did you remember to write your choices down? Here is the basic scoring I’ve concocted:

A = 0 points
B = 1 point
C = 2 points
D = 3 points

On a sliding scale, anything less than 12 points places you more along the savers end of the spectrum. Anything above 12 points puts you on the spenders side. See graphic below to determine where you fall:

Bliss Box Spender/Saver Quiz Tally

Some comments I received also included creating different kinds of quizzes and I love that idea. If anyone wants to contribute different quizzes, or add to this one, let me know. Ultimately, because this Bliss Box idea has grown quite a bit, I think I’ll create a separate page that lists all the Bliss Box contents for general use. Your thoughts on the quiz are welcome.

I’ve received some great input on my Newlwed Bliss Box.  The feedback I’ve received includes some additions and terrific and creative ideas including expanding my checklist to include discussing life insurance and a will (fabulous addition I might add), and adding beautiful photos to motivate the newlyweds to discuss each topic. I also like the comment about adding in little financial love notes, such as I saved X amount of dollars by taking my lunch to work, etc. Another ingenious idea I received was to include an enticing spa gift card so the gift isn’t so drab or condescending.

So, continuing on with this idea for a gift, I’ll be explaining and offering links to a couple of the spreadsheets I would include with this gift. The three components described within this post in detail include the Budget Worksheet, Debt Worksheet, and Short/Long Term Goal Worksheet. Creating the spreadsheets took a little longer than I thought and there is definitely room for improvement. Please feel free to add your two-cents!

Short term / Long term goal worksheet: Two simple columns labeled long term savings goals and short term savings goals (including potiential due dates – so really four columns) with general categories that can be filled in and added to with the intention of setting priorities.  General categories include wedding costs such as attire, ceremony fees including the marriage license, reception costs, invitations, decorations, gifts, etc. to get the ball rolling and are listed under some day-to-day categories since once the wedding is over, those costs are complete! I didn’t add in sum equations because this worksheet is much more flexible to a couple’s needs. Hopefully the couple would be able to find the sum function at the top in their Excel tool bar.

Next on the list of items to describe in detail include a fun spender/saver quiz and the resource list….All in good time!

Are the worksheets too scary for a new couple just starting out? Did I list too many categories, potentially overwhelming a couple of wet-behind-the-ears newlyweds? Or, is listing the categories and detailed items a great way to help them remember their actual expenses?

With a holiday weekend upon us, don’t forget the sunscreen! As I’ve gotten older, and more wrinkled / freckled, I’ve realized I not only have to increase my SPF, but I need to wear a hat as well. Some fun in the sun advice for staying UV-Free (sort of)

1. Apply sunscreen SPF 30 (minimum) liberally before exposing body parts to sun
2. Continue applying sunscreen, especially if swimming, running, sweating, etc. throughout the day
3. Wear a long-sleeved, light weight shirt during peak hours (12-3 pm)
4. Wear a wide-brimmed hat – minimize those wrinkles (and freckles if you are on the pale side like yours truly)
5. Don’t forget your feet, or neck, or ears, or back, or back of the legs….all those hard to reach spots need to be taken care of and accomplished by asking for help!

And now, some link love…..here is just a smattering of useful articles:

• Wealth Pilgrim with How Much Can I Afford For a House Checklist : Everyone can use this! I love calculating figures and facts then basing that data on actual purchasing power. Neal definitely defines how much house one should purchase.
• Ultimate Money Blog with Save Money on Toilet Paper. Mrs. Money is quite the uber-green gal. Some of her tips are great, but I’m just not ready for cloth toilet paper…ew.
• Money Reasons with Why You Shouldn’t Keep Your Money Hidden At Home. Some great tips and reasons the bank is a better place for large stashes of cash….paper is highly flammable!
• Couple Money with I Will Teach Your to Be Rich Review. I’ve browsed Ramit’s blog before, but never delved into it myself. The book review inspired me to do a little more research on this topic.

Have a safe, fun-filled, sunburn-free Independence Day!

Constantly looking for ways to reduce our monthly bills, a few quick phone calls revealed a total savings of $63 a month without reducing our services! Here’s how I, er, my husband did it with my help. I keep an excel file that lists the averages of how much all of our bills cost on each month. I have everything listed in categories, for instance under the category of CAR I included auto insurance, car payment, and gasoline. Out of a total of about 25 items (a lot, I know!) I pay on a regular monthly schedule, I went through my list and highlighted the items I thought we could save on without downgrading any of our services. Those items took only a phone call and included the phone bill, DSL service, and auto insurance for a total savings of $63 a month, or $756 for the entire year.

For instance, with our phone service the customer service rep was able to apply a discount code to our current service pack without altering any of our features. Our phone bill  includes some business services my husband uses for his business and he wasn’t ready to part with them.  This discount code cut our bill by $30 a month. Our DSL service is with another company (though we’ve looked into bundling it in with our phone, they use VOIP so we’re not sure we want to do this yet.) Again, by applying a promotional coupon code to our current service we saved $15 a month on our DSL service for the next year.

Reducing our car insurance was a little more work. Instead of remaining with the company we’ve used for the past 5 years, we decided to switch to USAA. I’m eligible for USAA through my step-father’s previous military service and we’ve been loyal renter’s insurance customers for many years. Now that I’m a little wiser, I really appreciate their services and the benefits I’m able to receive. Not only are we saving $18 a month on car insurance, USAA has some kind of savings plan on premium payments. At the end of the year, I’ll get a small percentage of my premium payments refunded to me. I haven’t received all of the details on this feature yet, but getting anything back on paying an auto insurance premium sounds great. I’m also glad I switched my insurance over because my previous company with whom I was up for renewal in just a week, charged my a $50 fee for canceling 10 days early! The representative initially said I would receive the same refund whether I canceled now or in a week, I guess she was wrong.

I’m looking forward to a long and happy relationship with USAA. One of my primary goals this year is to open a retirement account. Luckily the school district I work for uses USAA as one of their vendors for their 403(b) plan. By summer’s end I’ll be posting about my experiences on my retirement account.

Next on my list of smashing, my crummy line of credit. I’ll soon be swapping out an incredibly high interest loan to a more reasonable loan amount…but more on that soon.

Have you recently renegotiated for services you use? Have you noticed that customer service representatives quickly apply a discount code to your current service more quickly these days?